SAN FRANCISCO (2/24/12)--More than 50% of consumers will become mobile bankers by 2016, but will they use credit unions for their mobile banking needs? One research group says there's a gap in mobile banking adoption rates between smaller institutions, such as credit unions and community banks, and the large banks.
Only 15% of consumers at credit unions and 21% of consumers at regional and community banks used mobile banking in the 90 days preceding a survey conducted by San Francisco-based Javelin Strategy & Research. That compares with 37% of consumers at giant banks who used the devices.
Fueled by smartphone adoption, mobile banking took off last year, growing by 63%, said Javelin. The explosion in use of tablets such as iPad likely will transfer mobile banking again, and smaller financial institutions (FIs) will continue to fall behind, the research firm said.
Javelin noted that 92% of the top 25 banks now offer mobile banking, which means credit unions and smaller banks risk losing valuable customers--especially smartphone and tablet customers--to these institutions.
"The key challenge for FIs is attracting the right demographics," said Mary Monahan, executive vice president and research director, mobile at Javelin. "The typical mobile banking customer is young (ages 18 through 44), ethnic (typically Asian, Latino or African American) and high income (earning more than $75,000). Customers at regional and community banks and credit unions are significantly older, less wealthy, Caucasian and less tech-savvy," she added. "FIs must broaden their services, appeal to a wider range of demographics and attract new clients if they want to succeed."
- Mobile is now the top communication channel. Mobile usage is surpassing online usage.
- Consumers' use of mobile banking rose dramatically in 2011. Roughly 57 million U.S. adults conducted mobile banking in 2011--a 63% hike over 2010.
- Consumers use an assortment of channels for mobile banking. Most continue to access their mobile banking accounts through the browser, a financial habit established through online banking. At the nation's largest banks, where the triple play--mobile banking through browsers, apps and SMS text--is offered, this tendency flips. There, more customers use apps and SMS than browsers.
"Smaller banks and credit unions have always prided themselves on providing superior customer service, so they cannot continue to ignore the mobile channel," said Javelin President Jim Van Dyke.
"Resource-constrained institutions should focus initially on the browser method, currently used by a majority of mobile consumers. It is the most cost-effective and easiest to deploy. However, these FIs need to focus future efforts on developing app and SMS text banking to appeal to a broader array of users and technology," Van Dyke concluded.